Save The Date – SEAR To Apply T O(I)NEDs From 1 July 2025

The Senior Executive Accountability Regime (SEAR) was brought into force through the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1) (Senior Executive Accountability Regime)) Regulations 2024 (SEAR Regulations) and forms part of the Individual Accountability Framework (IAF).

The aim of SEAR is to improve and encourage sound governance and accountability within in-scope regulated firms by (i) requiring such firms to detail where the responsibility and decision-making is placed within the organisation and (ii) outlining what each responsibility entails.

Obligations under SEAR apply to PCF roles in insurers (excluding captives), credit institutions (except for credit unions), certain investment firms, and incoming third-country branches (Firms). Reinsurance undertakings, (re)insurance intermediaries, and (re)insurance captives are not currently caught by the regime but may be in the future should the Central Bank of Ireland (Central Bank) expand the scope of SEAR.

While most provisions under SEAR Regulations took effect on 1 July 2024, the inherent responsibilities and certain prescribed responsibilities applicable to (I)NEDs were delayed by one year. The application date of SEAR of 1 July 2025 for (I)NEDs in Firms is now approaching. In this article we revisit SEAR and outline good practices that (I)NEDs should consider.

Responsibilities under SEAR

There are three categories of responsibilities under SEAR:

• Inherent responsibilities – the responsibilities that are core to the particular PCF role and for which the PCF role holder is deemed to be responsible;
• Prescribed responsibilities – responsibilities which must be allocated by Firms to relevant PCF role holders and comprise of general and specific prescribed responsibilities; and

• Other responsibilities – responsibilities which, at the discretion of the Firm, may be allocated to PCF holders to capture a material project, business area or function in the firm.

As of 1 July 2025, and given (I)NEDs will now be in scope, the following list of expanded inherent responsibilities under the SEAR Regulations will apply:

Table A – Inherent Responsibilities

The Central Bank acknowledges in its Guidance on the Individual Accountability Framework (April 2024) the role of oversight, governance and challenge that (I)NEDs have on boards and that such role does not extend to managing in an executive capacity. The Central Bank further outlines that (I)NEDs may only be responsible for the inherent responsibilities attributed to their respective PCF role. However, (I)NEDs should be aware that, in addition to the above changes, the following prescribed responsibilities listed under the SEAR Regulations will become effective on 1 July 2025 and may be allocated to them by Firm(s), if appropriate:

Table B – Prescribed Responsibilities

Firms other than low-impact investment firms or third-country branches

Certain prescribed responsibilities will also take effect from 1 July 2025 which are applicable to low impact investment firms.

In addressing its expectations on assigning inherent and prescribed responsibilities during a recent industry event, the Central Bank outlined that Firms should not assign executive-specific responsibilities to (I)NEDs and that the responsibilities under SEAR as applicable to (I)NEDs are aligned with the Central Bank's Corporate Governance Requirements. This is helpful clarification.

Statements of Responsibilities

As of 1 July 2025, Firms must prepare and maintain an up-to-date statement of responsibilities for each (I)NED holding one or more of the PCF roles specified under Table A above. The statement of responsibilities must detail the PCF holder's inherent responsibilities and other allocated responsibilities (if any).

A statement of responsibilities must be submitted to the Central Bank with an Individual Questionnaire as from 1 July 2025, where an individual is applying for a PCF role listed in Table A. Applications made in advance of 1 July 2025 remain unaffected.

(I)NEDs should liaise with their Firm(s) as soon as possible (and in advance of 1 July 2025) to agree the context and scope of their statement of responsibilities. (I)NEDs should review each responsibility included in their statement of responsibilities in detail to ensure that their PCF roles and responsibilities are captured correctly and appropriately.

Management Responsibility Mapping

Firms in the scope of SEAR are required to maintain management responsibility maps (MRMs) that identify each PCF and its respective inherent, prescribed and other responsibilities as appropriate. An MRM is a single document that outlines a firm's management and governance arrangements comprehensively. It should show that there are no gaps in responsibilities in the Firm.

PCF roles held by (I)NEDs ought to have been captured by Firms in their MRM since 1 July 2024. However, Firms should review their current MRM to ensure that all inherent and, where appropriate, prescribed and other responsibilities attributed to (I)NED PCF holders are captured and that the MRM aligns with the (I)NEDs' statements of responsibilities.

Duty of Responsibility

(I)NEDs should be mindful of the statutory duty of responsibility when discharging their duties under SEAR. (I)NEDs must take reasonable steps in the performance of their PCF roles to ensure that an aspect of the Firm's affairs for which they have an inherent or prescribed responsibility is conducted in a manner that avoids a contravention by that Firm of its obligations under financial services legislation.

The Central Bank acknowledges the limited nature of an (I)NED role in a Firm in comparison to that of an executive director. As such, reasonable steps to be undertaken by (I)NEDs would be limited to the nature of their role in areas like governance, oversight and challenge. In demonstrating and documenting reasonable steps undertaken to discharge their responsibilities, (I)NEDs should consider the following:

• Ensure that ongoing obligations relating to collective decision-making are met, which can include attending meetings, pre-reading material in depth, actively engaging in debate and challenge during meetings and following up on agreed action items following meetings;
• Request up-to-date management information as required;
• Seek training on SEAR and, more broadly, the IAF and refresher training as required;
• Ensure that debate and challenge is captured appropriately in the minutes of meetings and document less formal interactions such as one-on-one meetings.

Other Key Considerations

D&O Insurance

In light of personal exposures that directors and officers now face under the IAF regime, it is important that Firms have appropriate directors' and officers' insurance (D&O Insurance) in place. (I)NEDs should make enquiries as to the level and nature of cover afforded under the Firm's D&O Insurance. Regard should be had for limitation and exclusion clauses within the D&O Insurance policy to ensure that regulatory action is not excluded or unduly limited. It should also be considered whether the claims cap in the D&O Insurance is appropriate and sufficient to cover any risks arising from SEAR and, more generally, the IAF. For further information, please see our article, which focuses on D&O Insurance against the backdrop of the IAF.

CP 160 – Fitness and Probity Consultation

High-level role summaries for (I)NED PCF roles are included in the proposed draft F&P guidance issued by the Central Bank in April 2025 as part of its Consultation Paper 160. These summaries may assist (I)NEDs in gaining a broad understanding of the key elements and scope of their role.

Consumer Protection Regulations 2025

The Central Bank published its revised Consumer Protection Regulations, comprised of Standards for Business Regulations and Consumer Protection Regulations, on 24 March 2025 (Revised CPC). One key component under the Revised CPC is the obligation on in-scope firms to secure customers' interests throughout the course of their commercial pursuits. Where applicable, securing customers' interest should now start to be woven into a firm's decision-making process. Certain prescribed responsibilities are linked with this duty, for example, PR21, which includes a responsibility to ensure that there is a focus on delivering fair outcomes for customers against the backdrop of oversight and governance of strategic decisions and key business.

(I)NEDs in applicable Firms will need to be mindful of the obligation to secure customers' interests when engaging in collective decision-making as a member of the board and in exercising their role in oversight and challenge. (I)NEDs should familiarise themselves with the key consumer protection risks faced by their Firm(s), challenge the management of these risks as appropriate, input on consumer protection risks that are escalated to the board and consider the impact on and outcomes for customers arising throughout the course of commercial decision-making.

Updated IAF FAQs

The Central Bank recently published revised FAQs on the IAF regime which includes clarifications specific to the application of SEAR to (I)NEDs. A copy of the updated FAQs may be accessed here.

Conclusion

With 1 July 2025 approaching, (I)NEDs need to consider SEAR and its implications. A thorough understanding of inherent responsibilities, allocated responsibilities (where appropriate) and the duty of responsibility are necessary for (I)NEDs in the implementation of SEAR to their respective PCF roles. (I)NEDs should engage now with their Firm(s) on their statements of responsibilities and any proposed amendments to MRMs relative to their PCF roles.

Should you have any queries on SEAR, the IAF or any point raised in this article, please contact a member of the Insurance Team or your usual William Fry contact.

Contributed by Martha Ní Dhochartaigh

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.